Estimating your trade-in’s value before visiting a dealership will save you hundreds, if not thousands of dollars. It will also help you avoid dealer trade-in scams. There are several tricks-of-the-trade a dealer may use to avoid giving you the full amount of what your trade’s worth. Having a good idea of what your car’s worth will keep you out of trouble.
If you decide to trade your current car in. There are several factors such as the used car market, mileage, overall condition, and popularity of the vehicle that will come into play when calculating its value.
The used car market fluctuates pretty much on a daily basis. This makes determining exactly what a used car trades worth almost impossible.
What can you do? With a little research you can get a good estimate of what your trade is worth, so you can have an idea of what a dealer should offer you.
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This term originated in the insurance industry, it’s used loosely in the car business. Basically, a car’s actual cash value is also known as the fair market value (FMV). The definition of Fair market value is:
The total amount someone is willing to pay for the vehicle, in the condition, it’s in, at the time of sale.
After buying a new vehicle, the moment you drive it off the lot, it begins to depreciate. Even if you only put 50 miles on it and try to trade it, the vehicle will be worth much less than the original purchase price.
To make matters worse, the longer you’ve owned the vehicle, the more it depreciates.
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Other factors you will need to take into account when determining your trade-in’s actual cash value:
All of this information is taken into consideration when determining the actual cash value of the vehicle during the used car appraisal process.
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By getting an estimate of what your vehicle’s worth will keep a car dealer from attempting to “steal” your trade. A dealer is only going to offer you roughly wholesale value (or less) for your vehicle minus any reconditioning costs they must pay to get the vehicle ready for sale.
Unethical dealers may attempt to offer you less than what your vehicle is actually worth. If you don’t have a good idea of your trade’s value, you can fall for this dealer manipulation. It can cost you thousands of dollars.
How a dealer may attempt to steal your trade:
$18,000 – Actual cash value of the vehicle
$ 15,500 – Offer presented to you
$ 2,500 – Additional profit to the dealership
It’s common practice for a dealer to “hold-on-a-trade” or lowball a trade-in’s value when a customer is trading in a car. If you have a good idea of roughly what your vehicle’s worth, you will be able to avoid this common car dealer scam.
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I recommend using Edmund’s appraisal tool. The appraisal tool is free to use and provides you with the closest estimate to what a dealer will actually give you when trading in a vehicle. – Appraise Your Trade-in Here.
The Edmunds appraisal tool will give you a good estimate of what your trade is worth at a dealership, privately selling it on your own, and even what a dealer will retail it for. Keep in mind, an appraisal is just somebody’s opinion. It is good practice to get several professional “opinions” of what your trade is worth.
The reason I like the Edmunds appraisal tool over a tool like Kelley Blue Book (KBB) is that KBB is a California publication and most dealers around the country don’t use their values when appraising a vehicle.
Their appraisal values can sometimes run a couple of thousand dollars or higher than what a dealer will give you. For people in California KBB is the way to go, but using KBB in other parts of the country will give you false hope and unrealistic values when trying to figure a realistic number.
Keep in mind you’re looking for a true number. Be as fair and honest as possible when entering information about your trade into these sites. You don’t want to cheat the system and give yourself false numbers.
EXAMPLE: Don’t state your car only has 50k miles on it and it really has 59,867 miles. Or state your vehicle is in excellent condition and it really is in rough condition.
A dealer will not give you any money for your car until someone actually appraises it. Your goal is to get as close to the true Actual Cash Value (ACV) of what your car is worth. If you don’t tell the truth about the condition of your vehicle, you’re only hurting yourself. Keep in mind, a live person will eventually appraise your vehicle and these professionals will catch any deceptiveness on your part.
NOTE: Before you take your vehicle to the dealership to have it physically appraised. Make sure you follow a few simple and easy tips to increase the value of your trade-in.
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